Maravi

Saturday, December 17, 2016

COMMENT - More cash increases the number of transactions. Dollarisation stopped hyperinflation, however it also reduced currency in the economy. - MrK

(NEW ZIMBABWE) Transactions up 23pct on bond notes

HARARE:The value of transactions processed on Zimbabwe’s National Payment System (NPS) increased from $1,2 billion to $1,5 billion as the volume of transactions went up by 13 percent in the week the Reserve Bank of Zimbabwe (RBZ) introduced bond notes, a report by the central bank has shown.

The central bank on November 28 injected $10 million worth of bond notes into circulation followed by an additional $7 million last week. The notes which trade at par with US dollar are expected to help ease a banknote shortage.

The RBZ has said it will release a total of $75 million worth of bond notes by the end of this year.
Real Time Gross Settlement (RTGS) transactions which accounted for 83,25 percent of the total value of the NPS transactions, increased by 23,25 percent to $1,284 billion in the week to December 2 . Point Of Sale (POS) transactions also increased by 11 percent from $104,97 million to $116,88 million during the week under review.

Mobile transactions increased by 29 percent from $92,28 million to $119,43 million while ATM transactions rose by 23 percent from $16,76 million to $20,61 million.

Cheque transactions, which account for a paltry 0,1 percent of the transactions on the NPS, declined 17,8 percent from $1,65 million to $1,36 million.

Zambia should delay its planned re-financing of $2.8 billion worth of Eurobonds until financing conditions ease, an International Monetary Fund representative said on Monday.

“We would caution the government not to tap into the international markets at this time,” the IMF’s resident representative, Alfredo Baldini, told reporters during the release of an IMF report on growth in sub-Saharan Africa.

The Eurobonds were issued from 2012 to 2015, and the Zambian government planned to re-finance them with longer-dated bonds at a lower cost, Finance Minister Felix Mutati said on Dec 7.
“The financing conditions are pretty tight right now, and it will be very expensive,” Baldini said on Monday.

In fact, the bonds would only fall due in 2022, 2024 and 2025, so the government didn’t need to rush into re-financing them, Baldini said.

The Zambian government has relied on external financing as its spending rose over the past few years while revenue remained almost the same, which has put pressure on its exchange rate, Baldini said.

Mutati said last week the equivalent of 19 percent of Zambia’s gross domestic product was being used to service debt and the government wanted to reduce that to about 15 percent.

Zambia issued a $750 million Eurobond in 2012, followed by a $1 billion issue in 2014 and another worth $1.25 billion last year, mainly for infrastructure projects.

The austerity Taliban will be satisfied by the announcement by the IMF that, despite the policies advocated by them, the debt crisis in Spain may now extend for no less than ten years. According to the latest report of the Fund, presented this week by its chief economist, the Frenchman Olivier Blanchard, there’s no expectation, even by 2018, that the budget deficit will have fallen to 5.5%. And this means countless sacrifices by citizens demanded by today’s Popular Party government and its Socialist predecessor have failed in the objective to balance the public accounts.

This colossal failure, to which Angela Merkel’s Germany and well-paid technocrats of Brussels have contributed, can only surprise those who did not want to see the blindingly obvious. Cut after cut to the budget, without accompanying measures to counteract the effects of recession, meant it was guanateed that our economy was going to end up as a complete ruin. Just take a look at the main forecasts of the IMF to understand the magnitude of austericide, which in 2013 will leave us with an unbearable unemployment rate of 27%.
To hide their shame, the Popular Party Government is determined to make us believe that next year the economy will recover and begin to straighten out the dire employment situation. I hope so, but neither the Bank of Spain, nor the European Commission, nor the IMF have been able to find sufficient reasons to substantiate that optimism. Quite the contrary: the view shared by the three agencies is that unless a miracle happens, in 2014, with a fall in GDP of 0.8% – we will continue to be immersed in the the deepest economic crisis.

Rajoy has announced that next week he will launch a new reform plan, which will affect entrepreneurship and pensions. That’s bad news, based on the measures taken so far on these matters. The self-employed have seen VAT rise significantly and tax arrangements in other areas deteriorate, and since the Right returned to power in late 2011 pensions have deteriorated substantially.

As usual, Rajoy, his party and the media chorus that encourages him say that socialist PM José Luis Rodríguez Zapatero is to blame, but he’s hardly the only culprit. Zapatero’s big mistake was being overcome by a panic attack in May 2010 and to have embraced neoliberal policies that the Popular Party then gladly accelerated. But Rajoy has been in the Moncloa Palace for a year and a half and to date has not only not fixed anything, but he has done further damage, plunging Spanish society, including those who voted for him, into utter despair

Monday, December 12, 2016

In his keynote address, former finance minister Nhlanhla Nene, who is now a resident adviser at Thebe Investment Corporation and a nonexecutive board member at Allan Gray, referred to the World Bank review of South Africa’s agricultural sector published just before the 1994 democratic election.

The review had found that large-scale producers had been able to generate substantial volumes of output, achieving national food self-sufficiency for most commodities. It also found that the agricultural sector was, and to some extent continued to be, characterised by significant policy distortions that have resulted in less than optimal levels of efficiency in many parts of the sector, average farm sizes were too large, and ownership of rural assets, most notably land, was highly skewed.

COMMENT - The World Bank in 1994 concluded that farm sizes in South Africa were too large for efficient use, which is not surprising, considering 87% of the land was given to fewer than 10% of the population. That's why 71% of South Africa's population is 'urban'.

Western Cape Minister of Economic Opportunities Alan Winde: On the EFF call for illegal land invasion, he said the party was specifically “a flashing light to us”.“We haven’t found a solution to land reform in the province. We need to up our game. We have to find a solution within the market space.”

Agriculture, Fisheries and Forestry Minister Senzeni Zokwana has urged farmers and investors in the agricultural sector to use and plant crops on all available arable land to prevent the call by the Economic Freedom Fighters (EFF) for illegal land invasions.

Addressing more than 600 industry specialists attending the recent two-day African Agri Investment Indaba in Cape Town, Zokwana said: “Let’s not fear what the EFF is saying. Any piece of land that is meant for agriculture, let’s use it. Let’s plant on all available arable land to prevent them [the EFF] from invading.”

He said about 65% of South Africa’s population was urban, which is projected to reach 71.3% by 2030 and nearly 80% by 2050. Feeding this burgeoning population is a challenge.
“We hope our potential investors will see this as a perfect opportunity to invest in agriculture, and associated upstream and downstream industries,” he said, adding that it was sad to note that Africa spent about R340 billion annually on food imports alone, and most African countries continued to be exporters of raw materials and net importers of value-added products.

“Our natural resource base in the form of abundant agricultural land, combined with our tested ability to produce primary products, should be a leading motive for us to initiate an industrialisation programme through the promotion of downstream agroprocessing industries,” Zokwana said.

In his keynote address, former finance minister Nhlanhla Nene, who is now a resident adviser at Thebe Investment Corporation and a nonexecutive board member at Allan Gray, referred to the World Bank review of South Africa’s agricultural sector published just before the 1994 democratic election.

The review had found that large-scale producers had been able to generate substantial volumes of output, achieving national food self-sufficiency for most commodities. It also found that the agricultural sector was, and to some extent continued to be, characterised by significant policy distortions that have resulted in less than optimal levels of efficiency in many parts of the sector, average farm sizes were too large, and ownership of rural assets, most notably land, was highly skewed.

“This performance, combined with the active suppression of black farming, meant that the agricultural sector had underperformed in terms of its contribution to national income, exports and employment creation,” Nene said.

He also said the National Development Plan identified agroprocessing as a potential driver of economic growth, job creation and increased exports, and an opportunity for the creation and growth of small and medium-sized businesses.

It also identified obstacles; historically high levels of concentration in agricultural value chains; high and increasing levels of vertical integration between agriculture and agroprocessing; access to infrastructure – specifically irrigation and farming equipment; and lack of access to consumer markets.

Among other insights Nene pointed out were that finance remained a critical challenge for new and black-owned businesses, while alternative sources of funding that have emerged from settlements by the Competition Commission, for example, have facilitated entry into agricultural value chains.

“These funds had less stringent requirements, allowing greater flexibility to take a risk on new entrants. Increased competition means some new entrants will fail. The volatility in commodity prices and key variables such as the exchange rate also require support to ride out shocks,” he said.

Asked about US president-elect Donald Trump and what his victory and policies meant for Africa and particularly the African Growth and Opportunity Act (Agoa), he said the agreements are signed and sealed, and were supposed to be honoured, while Zokwana said some of Trump’s policies might not work in real politics.

Western Cape Minister of Economic Opportunities Alan Winde said what was worrying was Trump’s view of Africa. However, “Agoa is a concern because of his views, but it’s a signed deal”.

Asked whether the Western Cape farm workers’ strike in 2011 and talk of farmers embarking on mechanisation had led to job losses, he said mechanisation led to the loss of about 65 000 jobs in the sector. This compares with the total South Africa agricultural jobs today of 196 000.

In his keynote, Winde said foreign direct investment flows into Africa’s agricultural, forestry and fisheries sector reached more than $200 million in 2014 and projections showed the upward trend is set to continue.

On the EFF call for illegal land invasion, he said the party was specifically “a flashing light to us”.

“We haven’t found a solution to land reform in the province. We need to up our game. We have to find a solution within the market space.”

Wesgro chief executive Tim Harris said that the fundamentals of agriculture remained strong in the Western Cape.

Harris said that the Western Cape agricultural industry could create 100 000 jobs in a few years and the EFF call for illegal land grabs had not had any impact on investors flocking to the province.

“The best way to deal with populist policies is to make them less popular,” said Harris.

"Some even believe we are (...) conspiring with others around the world to build a more integrated global political and economic structure - one world, if you will. If that's the charge, I stand guilty, and I am proud of it." David Rockefeller, Memoirs